Stakeholders worry over Ghana’s rising budget deficit
Stakeholders at a consultative meeting with the Ministry of Finance and Economic Planning on Wednesday expressed their worries over the souring level Government Budget deficit and its implications on the existing debt growth of the country.
According to them, the accumulating debt situation could impact negatively on the economic growth of the country and stifle development efforts, due to the high interest accumulation over the years.
They blamed the situation on the high level of Government expenditure as against the country’s Gross Domestic Product (GDP) and the lack of effective and efficient revenue mobilisation and collection strategies to increase the revenue levels of the county.
They therefore advised Government to urgently consider narrowing its tax base and have a second look at issues such as tax exemptions, tax corruptions in the Valued Added Tax and Income Taxes, public sector reforms, the size of the public sector and their productivity levels and revisit the issue of the Single Spine Pay Policy (SSPP) and its sustainability.
They also called on Government to among other things, urgently address the current high unemployment situation, improve the quality of existing jobs, intensify measures to reduce government expenditure and reconsider investing more in the agricultural and industrial sectors through renewed subsides to enhance production and improve government revenue.
The stakeholders also challenged Parliament to intensify its monitoring of the effective implementation of Government Budget.
The meeting, which was convened by the Ministry, was to engage stakeholders in discussions on the previous Government Budget and make inputs into the preparation of the 2014-2016 Budget Statement and Economic Policy of the country.
Stakeholders included representatives from the academia, Civil Society Organisations, as well as the Private and public Sectors of the country.
Mr Seth Terkper, Minister of Finance and Economic Planning, in an address read for him, thanked the stakeholders for their continuous support to the budget preparation process, to make it more effective, transparent, credible and predictable.
According to the Finance Minister guidelines, which provided the broad framework for economic policy and indicated the nature and form of the budget, were circulated in June this year to guide the Ministries Departments and Agencies (MDAs) in the preparation of the Government’s Budget and Economic Policy for the 2014-2016 Financial year.
He said the contributions of stakeholders would therefore help in shaping the provisions of the budget and make its targets more achievable.
Mr Terkper admitted the fact that the 2013 Budget had some implementation challenges, which included potential short falls, high wage bills resulting from of the implementation of the SSPP, coupled with high interest payments, subsidies on utilities and petroleum, and the need to honour statutory government obligations.
He said these had largely contributed to the increased spending of government, leaving little financial space for expenditure on goods, services and assets.
“As a lower middle income country, this does not only pose a challenge for the achievement of key macro-economic targets, but also has serious implications for economic growth and development”, he said.
He however indicated that in recognition of these concerns, Government had put in place various measures to reverse the challenges and generate additional revenue, control expenditure and improve efficiency in public spending, to ensure that the financial targets indicated in the 2013 budget remained achievable.
The Finance Minister mentioned interventions such as field monitoring, debt recovery, intensified compliance enforcements to improve revenue efficiency as well as the introduction of new taxes for increased revenue.
He further explained that Government’s presence in the international Eurobond market was consistent with its objective to restructure the debt portfolio, leading to reduced borrowing cost, improve the financial space and make room for capital investment and economic growth, whilst maintaining its debt sustainability.
Again the continuation with the freeze on the award of new contracts by all MDAs would help in taking care of the pipeline of existing commitments, in terms of project implementations across the country.
Mr Terkper indicated that the movement from Activity-Based Budgeting to the Programme-Based Budgeting would allow MDAs to be more strategic in their approaches to budget management since it would provide linkages of expenditure to results.
Stakeholders from the academia represented by the Economic Department of the University of Ghana, had a contrary view to the government’s position on imposing new taxes and removing subsidies for agriculture and some key utilities to mobilise more revenue.
They proposed that empirical research was conducted first before such policies were approved in order to minimise their socio-economic implications on the citizenry.
The Trades Union Congress called for specific employment targets so as to address the challenges and worsening inequalities in the employment sector and also channel the oil and gas revenue into improving the road infrastructure, agriculture, education, health and housing to improve lives of Ghanaians.
Source: GNA